Recently, there has been a great deal of debate about whether President Obama should extend President Bush’s 2001 tax cuts, and, if so, whether Obama should extend them for all tax brackets, or only for those making more than $250,000 per year. New York Times columnist Paul Krugman has advocated letting the cuts expire, while Americans for Tax Reform has printed a satirical “Obama Tax Hike Exemption Card,” accusing the President of reneging on campaign promises. Obama and former Office of Management and Budget Director, Peter Orzag, have sparred publicly over whether the administration should consider extending the cuts for the richest families, if that’s what it takes to overcome Republican obstructionism in Congress.
All of these matters are vital ones to consider going forward. But in all of this debate, there’s a crucial observation missing, a fact that we can only discover by looking back. Regardless of what happens in the next few months, any tax increases that occur aren’t President Obama’s. They are President Bush’s.
This sounds, of course, like a stereotypical attempt for a supporter of one administration to foist its missteps upon its predecessor. I might seem like just another member of the “blame Bush” crowd. But I’m not. The upcoming tax increases were passed by a Republican Congress in 2001 and 2003 and signed into law by President Bush.
Now, that fact may surprise you, if you followed politics at any point during the Bush presidency. Bush was supposedly a tax cutting President, not a tax-raising one.
And that’s true. But it’s only half of the story. The 2001 tax cut bill cut income taxes across the board, although it especially benefited the wealthy. However, it came with sunset provisions: The tax cuts were set to expire in 2010. That’s what the bill pretended to be: a bill of temporary tax cuts.
But think about that some more. President Bush’s “temporary” tax cuts lasted for 10 years. That’s as far into the future as Congress budgets. Economic forecasts 10 years in advance are entirely unreliable. Ten years ago, the dot-com bubble was just wrapping up. Ten years before that, the Soviet Union still existed.
So sure, we can consider the 2001 tax bill a temporary tax bill. But it requires us to stretch the definition of temporary to the breaking point. Having a piece of cake after running a marathon may be a temporary suspension in your diet. Having a piece of cake every day for 10 years certainly is not.
And if we reject this frame, if we abandon the notion that tax cuts naturally expire after 10 years, what do we find? Think about it like this: the bill combined incremental tax cuts beginning at once, along with a steep and violent tax hike in 10 years. In fact, conservative political groups have called the tax hike that President Bush signed into law the largest in American history.
With this in mind, the current debate takes on an entirely different character. President Obama isn’t just another Democrat, raising the nation’s taxes. Instead, he’s acting to reverse the tax hikes of his Republican predecessor, and the Republicans in Congress are pledging to thwart this effort. It sounds strange, but it’s true.
The real lesson of all of this is more general. The reason that we’re in this mess in the first place is that American politicians are unwilling to deal with our tax code honestly. If President Bush wanted to cut taxes in a long-term, serious way, then he should have made them permanent from the start. If President Obama wants some of those taxes to be higher, then he shouldn’t create temporary extensions for them now. When presidents seek to hide their changes to the tax code by declaring them temporary, they may win a transient political victory. But they do the American public a severe, long-term disservice. We need stability in our tax code, no matter what the rates are, and honesty and accountability from our politicians, no matter what their economic policies. President Bush, as we can see, wasn’t very good about either of those points. I hope President Obama will do better.
Louis R. Evans ’13, a Crimson editorial writer, is a social studies concentrator in Currier House.